Capital Market Accountant in Ramat Gan

Who Needs a Capital Market Accountant?

If you invest in stocks, mutual funds, options, or any other financial asset, you are likely facing a question that troubles many people: how exactly do you report this to the tax authorities? Reporting income from capital market investments in Israel is not as straightforward as regular salary that appears on a payslip. There are different tax rates, different types of income, and reporting obligations that are not always clear.

Most of our clients in this field are self-employed individuals and business owners who invest on the side, employees who received share grants from their company, or private investors who opened their own investment portfolio. Each of them faces different complexity, but they all have something in common: they need to know exactly what they owe in taxes and how to report it properly.

Ben Or Kook Accountants work with investors in Ramat Gan and throughout central Israel in all investment scenarios — from simple stock investments on the Tel Aviv Stock Exchange to foreign investments, dividends, and tax benefits on capital gains. We explain to you in simple language what you need to report, when, and why it matters.

What are the reporting obligations for investments and stocks?

In Israel, income from capital market investments includes several different types of income — and each has its own rules.

Dividends: If you hold stocks that distribute dividends, they are considered taxable income. Typically, the dividend is already subject to tax withholding at the time of distribution (typically 25% or 30%, depending on the type of stock), but this does not exempt you from reporting. You must report the full dividend amount in your annual tax return, with the assumption that withholding has already been deducted.

Capital gains: When you sell a stock at a profit, you are liable for tax on the difference between the purchase price and the sale price. In some cases, if you meet certain conditions (such as prolonged holding of shares in a company), you may be eligible for a special tax rate on capital gains. One point that is not always clear: this benefit is not automatic — you must meet precise conditions, and typically you need to report it properly in your return.

Income from securities transactions: If you engage in frequent buying and selling of stocks (effectively, trading in the capital market), this may be considered an "activity" for tax purposes, rather than merely passive investment. In such cases, the income is subject to regular income tax, not a special rate.

All of this must be reported in your annual tax return to the Israeli Tax Authority. If you invest abroad or have received stocks from a foreign company, additional reporting is also required (reporting of foreign assets).

Real-World Example: How It Works in Practice

Let's imagine you are a self-employed professional in Ramat Gan who opened an exempt business in 2024. Alongside your business, you decided to invest 50,000 shekels in a mutual fund. During the year, the fund distributed a dividend of 2,000 shekels, and when you sold the fund at year's end, you made a gain of 8,000 shekels on your original investment.

Now, what needs to be reported? First, the dividend of 2,000 shekels — tax was likely withheld at the time of distribution (say 25%, meaning 500 shekels). You must report the full 2,000 shekels in your income tax return and note that 500 shekels in withholding has already been made. Second, the capital gain of 8,000 shekels — this too must be reported, and you should check whether you are eligible for a special discount on capital gains (such as a discount for long-term investment).

If you failed to report this properly, or if you forgot to mention the dividend, the Israeli tax authority may audit you and you could end up paying adjustment fees and interest. If you reported it correctly, all is well. This is precisely what we help you avoid.

Common Mistakes in Investment Reporting — and How to Avoid Them

During our years of working with investors in Ramat Gan and the central region, we have seen several recurring mistakes.

• Forgetting to Report Small Dividends: When a dividend is small, many people think there is no need to report it. This is incorrect. Every dividend, whether small or large, must be reported. The Israeli Tax Authority knows exactly how many dividends each company distributed because it receives a report directly from the company.
• Confusing Capital Gains with Regular Income: Some people think capital gains are taxed at a lower rate than ordinary income, but they fail to report them separately. If you do not report properly, you may end up paying more tax than required.
• Failure to Report Foreign Investments: If you invest abroad or hold a foreign bank account, additional reporting is required. Many people are unaware of this requirement, and it can lead to problems with the Israeli Tax Authority.
• Failure to Keep Records: If you sell a stock, you must keep the purchase receipt, the sale receipt, and any documents proving the purchase and sale prices. Without these, it is difficult to prove your capital gains to the Israeli Tax Authority.
• Misunderstanding Tax Deductions: There are special deductions on capital gains under certain conditions, but they are not automatic. You must meet the precise conditions and report them correctly. Many people do not realize they are entitled to a deduction, and as a result, they pay more tax than necessary.

When Should You Consult with an Accountant Regarding Capital Markets?

If you are investing in the capital markets, there are several signs that indicate you should seek professional advice.

If you are self-employed or a business owner: If you have income from investments in addition to income from your business, it becomes complicated. You need to report both separately, and there may be implications for your tax advances. We help you plan this properly.

If you have received shares or options from a company: This typically requires a careful examination of the tax implications. Each type of share or option has different rules, and it is important to understand them in advance.

If you are investing abroad: This adds a layer of complexity. Additional reporting is required, and there may also be international agreements that affect your tax liability.

If you are unsure whether you reported correctly in the past: If you are concerned that you did not report investments properly in previous years, it is advisable to check. There are options for correction, but it is better to do so early.